I think it is a bug. Since i upgraded to KDE 3.2.2 whenever I add something to the menu using kmenuedit it doesn't appear where I added it. Rather, it appears near the bottom of the menu in a section called "lost and found"
So far this is just a minor annoyance for me so I haven't bothered to try to fix it, but I am sure KDE has some sort of bug database you may be able to check.
HTH
Edit:
OK, this is how to add something manually. If you cd to /home/*/.kde/share/applnk you will see a collection of directories that are the same as your K menu. Inside each directory are a bunch of plain text files that correspond to your menu items. So, to add something to say, the Internet section, cd into Internet and create a file called yourApp.desktop:
Code:
[Desktop Entry]
Encoding=UTF-8
Name=yourApp
Exec=command_to_start_yourApp
Terminal=false
Icon=
Type=Application
Having a look at the other *.desktop entries should help you figure out what to put in this file, but the bare minimum I showed above works too.